Tue, Mar 22, 2011 - Page 10 News List

Oil near US$103 as allied coalition bombs Libya

ONWARD AND UPWARD:Muammar Qaddafi has said he would not step down, vowing a ‘long war,’ meaning Libya’s crude oil output will remain mostly shut down

AP, SINGAPORE

Oil prices jumped to near US$103 a barrel yesterday in Asia after Libyan leader Muammar Qaddafi vowed a “long war” amid a second night of allied strikes in the OPEC nation.

Benchmark crude for delivery next month was up US$1.82 to US$102.89 a barrel at midday in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell US$0.35 to settle at US$101.07 per barrel on Friday last week.

In London, Brent crude was up US$1.83 at US$115.76 a barrel on the ICE futures exchange.

A military coalition of the US, France, the UK and other nations bombed tanks and anti-aircraft sites on Sunday and deterred Libyan fighter jets from flying. Qaddafi said he would not resign and pledged to continue to attack the eastern rebel stronghold of Benghazi.

Fierce fighting during the last month has already shut down most of Libya’s 1.6 million barrels per day of crude output. Investors are now concerned international intervention could extend the conflict and keep Libya’s oil production out of the market longer than previously estimated.

“The regime in Tripoli shows no sign of giving up,” Capital Economics said in a report. “The prolonged loss of Libyan oil could push prices all the way up to the highs above [US]$140 seen in 2008.”

Qaddafi also warned that Western powers would not get Libya’s oil, suggesting his forces may sabotage crude installations. Some traders worry a cornered Qaddafi could lash out in a last stand that disrupts regional tanker shipments.

“A ‘scorched earth’ response from Qaddafi could cause disruptions to ships traveling the Mediterranean,” energy consultant The Schork Report said.

In other NYMEX trading for contracts next month, heating oil was up US$0.039 at US$3.06 a gallon and gasoline added US$0.051 to US$3.00 a gallon. Natural gas gained $0.031 at US$4.20 per 1,000 cubic feet.

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